Auburn Hills, Michigan – Chrysler Group has reached a resolution with the State of North Carolina, which threatened to enforce state dealer laws that would have prevented the automaker from closing certain dealerships as part of its bankruptcy proceedings last year.
North Carolina, Illinois, Maine and Oregon passed statutes that would have given dealerships closed by Chrysler the ability to prevent the company from awarding new contracts in those markets.
In North Carolina, Chrysler would have been required to pay 13 dealers the value of their businesses. Chrysler sued on the grounds that federal bankruptcy laws superseded the state actions.
In a statement, Chrysler said that the actions to reduce its dealer network were necessary to the company’s viability, and central to the interim financing and partnership with Fiat. “The process to determine which dealership contracts were rejected evaluated dealership performance and market factors using data-driven criteria and was applied to every dealer,” Chrysler said. “The only alternative would have been complete liquidation of the company, which would have resulted in all 3,200 dealers closing, hundreds of thousands of lost jobs, and defaults on billions of dollars in taxpayer loans.”
The company said that it employed sound business judgment in restructuring its dealer network, and acted in the greater public interest by protecting the dealer network that was created during bankruptcy.